1) The Cost of Capital (also known as the Weighted Average Cost of Capital or WACC) is the average cost of all of the different kinds of capital that the company is using. The company could be utilizing various forms of debt, preferred stock, and/or common stock. When looking at cost of debt we measure it by the cost of raising new funds. If we were talking about bonds, we would look at the cost of issuing new bonds. If we were talking about bank loans, we would look at the cost of getting a loan at a bank. Why wouldn't we just use the cost of the current bonds or loans?